Supply Chain in the Pharmaceutical Industry

Pharmaceutical, biomaterial and standard medical device supply chains together have a top priority of delivering medicine as a strategic medical product. In the present health-conscious society, the management of the supply chains has become more complex. There is a growing demand for quality health care products and services, which involve the lifesaving interest of humans (Euchi, 2019). Therefore, there is a need for the participation of many stakeholders including manufacturers, distributors, information service providers, wholesalers, and regulatory agencies.

In the health care companies, the most important players in the drug supply industry are subject to several risks. It is necessary to monitor quality and quantity of the supply of medicine and delivery to accurate people in hospital on time (Kulkarni et al., 2020). For instance, both supply chains have an amalgamation of important business processes across the supply chain for generating value for sick people. Indeed, the supply chains integrate demand and supply within and across industries in an effective business model. Both have a team of players, information, processes, and resources for transferring raw materials and components to medicinal products or services. They, therefore, have manufacturers, suppliers, intermediaries, third-party service providers, and patients in the supply chain. This entails all the logistics activities, product design, information technology, finance, and sales (Bak, 2018). The most common components of evaluating in the supply chains include balancing material costs, optimizing manufacturing flows, maintaining the right mix, and eliminating bottlenecks.

The supply chain in the pharmaceutical industry, although better developed, is subject to restrictions and different constraints. Mostly, production of about 75% of all pharmaceutical products occurs at the manufacturer (Afnaria et al, 2020). Hence, inventory carrying costs are increased once the distribution channel purchases the product. Large pharmacies and wholesalers suffer high carrying costs on the final product and are, therefore, encouraged to carry much lesser inventory. However, in biomaterials there is a wider supply chain network from product retailers and wholesalers to consumers and back to the factory. Having a larger supply chain network line ensures that information regarding consumer order and their number is reliably passed from the retail side to that of the planners (Papalexi et al., 2020). A broader supply chain is better meant to make sure that the ordered material commodities reach the specified clients.

In the standard medical device, the use of a multi-echelon directory optimization technique is designed to refine the precision of set description objectives in the embedded supply chain’s device group. In essence, the accuracy in making gargets is estimated to lessen catalogue costs concurrently and raise customer service levels in the supply chain. Moreover, there would be a need to minimize errors that might occur in the supply chain, which may be the fault of logistics operators in the standard medical device industry (García-Alcaraz et al., 2020). Importantly, most firms in the healthcare supply chain look for improvement in output quality, which does not only have a direct bearing on improving the image of the firm but also thwarting competition, which in turn increases the sales margin. It has been achieved by reducing the costs of inventory holdings, increasing holding levels, and avoiding stock-outs, which are the outstanding methods that are best applicable in lowering prices within the supply chain simulation.


Afnaria, Tulus, Mawengkang, H., & Wiryanto, (2020). An optimization model for hospitals inventory management in the pharmaceutical supply chain. Systematic Reviews in Pharmacy, 11(3), 324-332.

Bak, O. (2018). E-business and supply chain integration: Strategies and case studies from industry. Kogan Page.

Euchi, J. (Ed.). (2019). Transportation, Logistics, and Supply Chain Management in Home Healthcare. IGI Global.

García-Alcaraz, J. L., Sánchez-Ramírez, C., Avelar-Sosa, L., & Alor-Hernández, G. (2020). Techniques, tools and methodologies applied to Global Supply Chain Ecosystems. Springer.

Kulkarni, A. J., Siarry, P., Singh, P. K., Abraham, A., Zhang, M., Zomaya, A. Y., & Baki, F. (2020). Big data analytics in healthcare. Springer.

Papalexi, M., Bamford, D., & Breen, L. (2020). Key sources of operational inefficiency in the pharmaceutical supply chain. Supply Chain Management, 25(6), 617-635.

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